Foreign exchange reserve accumulation in the ASEAN-4: challenges, opportunities, and policy options

Donghyun Park, Gemma Esther B. Estrada


The ASEAN-4 countries—Indonesia, Malaysia, Philippines, and Thailand—have large and growing stocks of foreign exchange reserves. The region’s reserves now comfortably exceed levels required for traditional liquidity purposes. This has led to calls for a more active management of reserves, which would yield higher risk-adjusted returns. In this paper, we examine the various opportunities and challenges associated with more active, profit-oriented management of reserves in the ASEAN-4. We also draw on the experiences of well-established sovereign wealth funds to suggest directions for policymakers in their quest for higher returns, which will contribute to national welfare by augmenting fiscal resources.


JEL classification: F31, F32, F21


foreign exchange reserves; foreign investment; ASEAN

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